NZ stocks: Gloomy day for Telecom

The New Zealand sharemarket closed weaker as Telecom investors took fright at a profit warning by its Australian rival Telstra.

The benchmark NZSE-40 index ended down 5.78 points at 2054.78 on turnover worth $79 million - $42 million of that in Telecom.

Telecom closed down 15c at $5.58, while Telstra shed 58c to $7.72 on this side of the Tasman.

Investors bailed out of both stocks after Telstra issued a statement warning full year revenue growth would slow to about three per cent and earnings before interest and tax (EBIT) to five per cent.

This compares with the end of the first half in March, when Telstra reported a 25 per cent rise in net profit to $A2.6 ($NZ3.29) billion - an Australian record.

Analysts said the forecast showed Telstra was no longer immune to the global downturn in the telecommunications sector.

Contact Energy added 6c to $2.94 as analysts picked it was well- placed to weather the drought-affected wholesale price increases putting the pinch on other power operators.

Rival power company Natural Gas Corporation also firmed, closing up 2c at $1.06 despite news international rating agency Standard & Poor's was reviewing the impact of last week's profit warning for its second half on the rating of NGC and its subsidiary On Energy.

NGC is currently negotiating with several electricity market players to relieve its exposure to spot electricity prices.

Fisher & Paykel continued its recent good run as analysts picked its healthcare products decision would list on the Nasdaq with a market capitalisation similar to that of the total company's present value.

"Many in the market suggest that the healthcare division will have a market cap in excess of $1 billion," Mr Wilkinson said - against F&P's current market cap of $1.26 billion.

F&P's shares closed up 55c at $11.25 - a new record high.

On Monday the Government formalised dumping duties on Korean whiteware at the request of Fisher & Paykel.

Market newcomer Rubicon also stretched to new heights, firming 2c to 63c following Tuesday's unveiling of a $40 million plan to buy back stock in a bid to strengthen its underperforming share price.

The Fletcher offshoot has been a market ugly duckling since its launch in March, but it has won favour from investors for its plan to use the proceeds from the sale of its Brisbane bulk fuel terminal to partly fund a buyback.

"It is good to see the (Rubicon) management trying to close the discount gap," Mr Wilkinson said.

Rubicon's net asset backing is about 90c a share.

Restaurant Brands also closed higher, up 4c at $1.52, on speculation it is gearing up for a spot of takeover activity ahead of the July 1 introduction of a new Takeovers Code, Mr Wilkinson said.

In other movements, The Warehouse bounced 16c to $5.80, Air New Zealand As added 1c to $1.10 and its Bs rose 3c to $1.47, Richina closed up 5c at 73c, Sky City added 25c to $10.35, Sky TV was down 5c at $3.40 and Auckland Airport closed up 1c at $3.56.

- NZPA